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Russia’s Central Bank has reported it has further expanded its national gold holdings in December, contrary to speculation that it may have had to sell gold to protect the ruble. to read this and other key mining and metals articles on Mineweb.com click here

Lawrie Williams

It had been suggested last month that Russia would have to sell some of its gold reserves – the World’s fifth largest national central bank holding (ignoring the IMF’s holding) – to help prop up the ruble. The Russian currency has been being driven down, almost in freefall for a time, by the unholy alliance of drastically falling oil and gas prices coupled with U.S. and European sanctions over the Crimea annexation and possible Russian involvement in the continuing uprising by pro-Russian rebels in Eastern Ukraine.

But, the opposite has been the case. The Russian Central bank announced yesterday that its gold reserves grew by a further 600,000 ounces (18.7 tonnes) in December – the ninth successive month of gold reserve increases. Clearly President Putin is a believer in the ultimate economic benefits of a strong national gold holding – particularly if some kind of global reserve currency realignment lies ahead in the relatively near future.

As a Reuters report points out, Russia has now more than tripled its gold reserves in the past 10 years, even as it recently has presumably had to use some of its its international currency reserves to defend the ruble with the national economy having been driven to the brink of recession. The ruble slid almost 50 percent in the past 12 months which makes the nation’s gold reserves ever more important to its global economic status.

Table 1. World Central Bank Gold Reserves as reported to IMF

Rank

Country/Organization

Gold holdings
(tonnes)

1

USA

8,133.5

2

Germany

3,384.2

3

IMF

2,814.0

4

Italy

2,451.8

5

France

2,435.4

6

Russia

1,206.8

7

China*

1,054.1

8

Switzerland

1,040.0

9

Japan

765.2

10

Netherlands

612.5

Source: World Gold Council, Mineweb

*China is widely believed to hold substantially higher gold reserves than those reported to the IMF as shown above.

Russia does not need to go out into the open market to buy this amount of gold. It was the world’s third largest gold miner in 2013, the most recent full year for which figures are currently available. The nation’s mines thus currently produce perhaps a little more than the 18.7 tonnes which have been moved into reserves, so that suggests that the country, like China, is not exporting its gold production, but accumulating it.

Table 2. Top 10 World Gold Producing Countries

Rank

Country

2013 output (tonnes)

1

China

439

2

Australia

265

3

Russian Fed

249

4

USA

231

5

South Africa

182

6

Peru

179

7

Canada

125

8

Mexico

104

9

Ghana

102

10

Indonesia

96

Global

3009

Source: Metals Focus, Mineweb

2014 figures are not likely to have changed significantly from those shown in the table above. Russia is estimated to have raised gold output during 2014 – first quarter figures were particularly strong – perhaps sufficiently to challenge Australia for the No. 2 slot, although Australian production may also have risen by enough to hold off the challenge.